Financials And Commodity Stocks Rally After Fed’s Move

Current Futures: Dow -36.00, S&P -4.50, NASDAQ -8.00
 
European Trade: European markets opened higher again, extending the global rally. Tonight, the MSCI World Index rose for the eighth consecutive day, the longest steak since 2006.

The global rally initially started on March 9 after a number of Wall Street banks said they were profitable after the first two months of the year. The rally has now been extended by the Fed’s unexpected move to intervene in the Treasury market, something that is seen to help the economy recover faster.

In equity markets overnight, financials and commodity stocks were pulled higher by the Fed’s move. On the U.K.’s Ftse, Xstrata and Randgold were among the top-gainers, as both companies operate in the commodity market. In the first few minutes of trading, Xstrata rose 5.20%, while Randgold gained 11.50%. The financials were led higher by Barclays and by Prudential PLC, which rose 6.20%, and 7.80% respectively. On the German Dax, Deutsche Bank rose 2.15% tonight.

In Japan, the Nikkei closed lower even though the local media reported a $15.6 billion plan to help the Japanese labor market. These funds are part of the second stimulus plan the government is expected to propose, and are on top of the $150 billion bill announced earlier this year. According to the IMF’s latest forecasts, Japan’s economy is expected to contract by a whopping 5% in 2009, and things do not look like improving any time soon.

Concerning the $160 million bonuses that were given to AIG employees, House Democrats are looking to propose a 90% tax for executive bonuses. According to the bill, the government will apply a 90% tax on people with an income bigger than $250.000 (including bonuses) that work for companies that had received more than $5 billion in bailout funds. The U.S. House of Representatives will vote on the bill later in the day, as some of the authorities have complained that the taxpayers are in fact paying for these bonuses. This seems to be a very popular bill, and is expected to pass without too much opposition.

Tonight, the Nikkei fell 26.21 points (0.33%) to 7,945.96. The Australian S&P/Asx added 33.90 points (0.98%) to 3,480.20. The U.K. Ftse rose 16.77 points (0.44%) to 3,821.76, while the German Dax gained 23.34 points (0.58%) to 4,019.66.

Crude oil rose as the economy is expected to pick up after the Fed’s actions. Crude oil for April delivery rose $0.80 to $49.10

Gold rose as traders are looking for ways to hedge against inflation. Bullion for immediate delivery gained $45.00 to $934.10.